South Korea’s inflation is the weakest in nearly 4 years, setting the stage for further cuts by Reuters
SEOUL (Reuters) – Inflation in South Korea in October fell to the weakest level in nearly four years, data showed on Tuesday, bolstering the case for an interest rate cut and concerns that it is below the Bank of Korea’s 2 percent target.
The consumer price index rose 1.3% in October from a year earlier, after rising 1.6% in September, Statistics Korea data showed, marking the slowest annual increase since January 2021.
That was weaker than the 1.4% average increase noted in a Reuters poll of economists.
Lower global oil prices and new food prices have been stabilizing local inflationary pressures, although the dampening effects from last year may temporarily increase inflation going forward, according to the Bank of Korea.
“Regarding the future price trend, core prices are expected to continue a stable trend of around 2%, and consumer prices are expected to be close to 2% by the end of the year,” the BOK said in a statement after the data was released. .
The BOK voted 6-1 to cut the policy interest rate to 3.25% on October 11 as uncertainty about the future path of output grew while inflation in September lowered the bank’s 2% target.
A separate survey conducted in early October showed analysts expecting the country’s rate to remain at 3.25% by the end of this year.
The inflation index was unchanged on a monthly basis since September, and was weaker than the 0.2% gain forecast in the survey.
The so-called core price index, which strips out volatile food and energy prices, rose 1.8% from last year, the weakest since September 2021.
Apple and green onion prices are down 20% and 13.9% from last year, respectively. Gasoline prices fell by 10.6% year-on-year.
